Difficulties in collecting cash can lead to Banks restricting lending to the market which prevents the availability of working capital and undermines the much needed growth for the economy.
The Bank of England recently reported that the Small Medium Enterprise Business [SMEs] demand for finance grew in the first quarter of this year; this is a trend which is expected to further increase in the second quarter. However, the lending report suggests that lending has fallen across the board.
This is clearly an issue for SMEs who state that the lack of access to cash is restricting their growth. The SME business has the potential to drive growth and employment in the UK, but a lack of confidence or concerns about an SMEs ability to collect cash is potentially restricting traditional lenders assisting in SMEs gaining access to working capital that they need to survive.
As the economy appears to be moving back into a period of growth, Commercial Credit has become the backbone of the UK. Increasingly Credit Managers and Credit Controllers are being asked to take more risk, with reduced Credit Insurance and Guarantees, and grant credit to make trade happen. Clearly it is not only the SME market that is struggling to increase cash collection and working capital.
Whilst it is vital to increase sales, it is even more so to ensure that businesses are able to collect cash. Cash is the life blood of any business. In many cases by reducing DSO (Days Sales Outstanding) by only 1 or 2 days can make a significant difference to a firm's working capital.
Help is at hand
Here at DWF, the Recoveries Team believe that ‘Partnership Pays’ by providing our clients’ Credit Managers with the ‘Credit Managers Toolkit’ through our market leading debt recovery solutions. We are able to mitigate risk by our client businesses utilising our services as an extension of their own in house Credit Control team.
We have recognised that our “Credit Control Health Checks”, free added value training, consultancy services, AFI and Debtor profiling, coupled with our helpful knowledge and legal expertise, can really make a difference in taking away the strain of trying to gain funding from unwilling lenders.
Our ‘Champion Challenge’ to clients and prospective clients is to consider how little it costs to make a big difference to your business!
If you would like to discuss how our Recoveries Team could help you, please contact David Scottow.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.